Distributed Ledger Technology, herein nicknamed “crypto” is an astounding thing. It leverages what those in computer science know as cryptography, to secure a consistent and immutable ledger of transactional transfer forever – across thousands or more nodes across the planet simultaneously.
Hence the term of “Distributed Immutable Ledger” and coined in the term Distributed Ledger Technology (DLT). In its purest form, DLT is the most accurate description of the technology and many can finally see and understand the uses for the technology in our society as the software is now developing into real-world applications. It has the ability to be disruptive to industry and economics on a scale that parallels or surpasses the introduction of Internet Protocol (IP). For those of you who are new to the technology, I would recommend in addition to your own research, at least start with the following video – along with anything else you can search for in the topic.
It is of note that Blockchain is only one, albeit the most popular and common form of Distributed Ledger Technology. The technology will adapt into many forms in the coming decade.
How Distributed Ledger Technology will change our lives
How DLT may change our lives is somewhat convenient and well timed on one hand, and reminiscent of George Orwell’s novel “1984” in the other. The technology has the ability to disrupt all industries and will definitively create new industries, just as the internet did.
DLT removes trust from various circumstances but is a double-edged sword. I can see DLT removing a lot of corruption from this world, but that transparency spans down all the way to the individual level, affecting privacy. Eventually, micro-transactions and micro-data points of many now unforeseen areas in our lives will essentially be tracked and traceable, recorded forever on distributed ledgers.
There will be benefits to leveraging this data that help society as a whole, and the cost to privacy is likely to be high. Whether we like it or not, it seems impossible to stop. The real question is that of who has access to the data and for what purposes within society.
Imagine you wake up in the morning, and instead of checking your bank balance to see if you can afford that coffee on the way to work – you find that you currently have 16 different balances of 16 different cryptocurrencies. In total you do have enough to buy the coffee and will probably pay for that coffee utilising one or more of these crypto’s simultaneously. There is the crypto you have generated with the solar on the roof of your house. The crypto you generated when you sold your data (from phone, tablet, PC, Amazon Alexa sensors and microphones, etc) to allow marketing companies to follow you and target marketing at you. The crypto you generated by selling your GPS data to the traffic management department of your local city. The crypto you generated for working 1 of your 3 casual/part time jobs. The crypto you got from the government for Universal Basic Income. The crypto you got for renting your car out to strangers last weekend. The list goes on and many of the concepts are foreign to us now, but possible, and many likely in the future.
However, by the time we get to this type of micro-transaction economy, each crypto will have a free market float with accurate value based on supply and demand principles and each crypto will be immediately and instantly transmutable into the desired crypto-currency of which the retailer desires to receive it in. We may even see (although highly unlikely) the International Monetary Fund (IMF) try to form a Special Drawing Rights (SDR) instrument around a basket of crypto’s and label it a One World Currency or a similar model of such a function try to be implemented to stem the tide of disruption.
Your data could be on many different blockchains in distributed immutable ledgers across the planet and be recorded forever in what could only be described as the most resilient technological architecture that IT Infrastructure has seen to date.
You couple this with RFID chips whether carried on your person or implantable… and you end up envisioning one of two worlds. Either the world of high convenience, honest monetary principles and less places for corruption to hide. Or as there are some forces on this planet which would unfortunately seek it – you see the biblically referenced Mark of The Beast society and tyranny. It can certainly be said that the duality of people’s perceptions during this transition over the coming decade due to the advent of Distributed Ledger Technology – is going to result in many new issues and solutions. Hopefully we can find a way for humanity to evolve society to a higher degree of human wellbeing planet-wide through embracing this technology, without falling into a trap of tyranny. What a time to be alive hey!
The ‘glue’ of law and justice systems which holds society in a balanced state, is likely to increase in its proficiency of enforcement as the advent of Data Matching by Artificial Intelligence systems in parallel to Distributed Ledger Technologies evolves. The interference of these technologies is also likely to cause societal disenfranchisement of freedoms and the related objections.
With this stated, I hope the information in this document helps a lot of people from exposing themselves to liabilities related not only to financial loss due to lack of experience or knowledge, but also any tax or anti-money laundering legislative enforcement that will come in the future. Whilst I do believe it will take up to 5 years for governments to catch up in terms of enforcement… The risks associated are best avoided, so be aware and be careful sooner rather than later.
A new economy is forming…
The coming “tokenisation” of our world is likely to result in a new economy being born – and certainly has already begun. Whilst we may perceive Bitcoin as a niche or experimental instrument, it is important to remember that Bitcoin itself was the metaphorical progenitor of a new understanding and birth of this technology and has always described itself as an “experiment”. The technology has matured and evolved to allow the tokenisation of almost anything. It is likely to begin with simple things such as commodities like sand, wheat, precious metals, energy, laws, titles of ownership, patents, and far into the future even more ethereal concepts of which we could not yet imagine.
It is likely to be a rough and turbulent time similar to the dot-com boom, whereby the internet allowed economic disruption and tangible advantage to companies embracing the technology. Perhaps over 2018 and 2019 as some of the larger corporations which have been researching and maturing DLT start to release their solutions, their economic value will increase whilst others race to catch up. The Innovators in the space which are already functioning and will be rolling out over 2018 have a tangible level of firstmover advantage and traction, and many may succeed to become the next Amazon’s or Google’s. On the other hand, most of the current cryptolandscape businesses and their relative tokens will not even make it out of the starting line and at least 90% of the cryptos are likely to fail to thrive or not exist in the coming years.
Likewise, in the coming decade, already established companies not embracing DLT will have to adopt, adapt and evolve or perish. The economic disruption caused by this technology is likely to affect the economic stability and current status-quo of the traditional economic landscape significantly. Indirectly, this will also affect the wellbeing, employment and societal balance for individuals during this time. It will be a dynamic time and certainly advantageous to adopt, adapt and evolve ourselves dynamically as individuals in order to benefit from or sustain our own prosperity.
Certainly, “money” is likely to change and has already begun changing. Fiat currency is backed by and relies on the full faith of government – something which is being seen in shorter and shorter supply across the globe recently due to the rise of populism and sporadic social construct movements. A continuation of current trends in relation to fiat currency may likely end up being a contributor of further capital flight from fiat as money, and into crypto as money.
What to know before you invest
When crypto first came along in the form of Bitcoin, it was completely unregulated. Bitcoins pure architectural resiliency and initial value proposition as a currency attracted many anarchists, purists and enthusiasts from many walks of life. Bitcoins proffered notion of anonymity also appealed to elements of society for its use as a vehicle for money laundering and to a very small degree was used as such – although the numbers reported are heavily exaggerated.
The basis of being unable to link a specific Wallet Address to a specific person or entity is lessening and traceability is in most cases possible with effort. The technological prowess of law enforcement, as well as the calibre of capabilities of which we now know since the Edward Snowden leaks, coupled with continuous leaks from organisations such as Wikileaks has shown that with effort, traceability is certainly possible and anonymity in most blockchains to an absolute degree of certainty is impossible. There are some Blockchains which currently make the amount of effort required to identify the initiator of a transaction almost completely unfeasible for law enforcement. I believe that these Blockchains (AKA “privacy coins”) will continue to exist, and persist, albeit shunned or declared illegal in future or make the use of such subject to penalty… eventually.
The regulation needed to de-anonymise the blockchain through voluntary means in forms of Anti Money Laundering and Know Your Customer (AML/KYC) requirements at the exchange layer and indeed at every other “capture point” possible has already begun being both enforced and adopted by the larger community. Further discussion of such is contained in this document under the Anti-Money Laundering and Counter Terrorism Financing chapter.
The period of being an experimental enthusiast toy, or a potential vehicle for crime is ending. Governments around the world are rolling out the regulation with haste. Many businesses of a very large calibre are almost ready to roll out their use of DLT. A new economy is forming and its velocity trend suggests that it increases beyond comprehension throughout 2018.
As an investment landscape it is full of opportunity, especially in a world where traditional investment vehicles are starving for yield. As long as you navigate carefully – VERY carefully, you can take advantage of the opportunity. If you still harbour the traditional crypto mindset of it being a “playground” of sorts, your actions may result in unwanted outcomes as the regulation and clampdown continues to surround the crypto world over the next 5 years. Prepare correctly from the beginning – which is now.